An wage-earner works on the assembly line of intelligent machinery at a workshop on March 31, 2024 in Qingzhou, Weifang City, Shandong State of China.
Vcg | Visual China Group | Getty Images
China’s economy in the first quarter grew faster than wait for, official data released Tuesday by China’s National Bureau of Statistics showed.
Gross domestic product in the January to Strut period grew 5.3% compared to a year ago — faster than the 5.2% expansion in the fourth quarter of 2023 and 4.6% evolvement expected by economists polled by Reuters.
On a quarter-on-quarter basis, China’s GDP grew 1.6% in the first quarter, compared to a Reuters register expectations of 1.4% and a revised fourth quarter expansion of 1.2%. Beijing has set a 2024 growth target of around 5%.
Crop was driven in part by external demand, as export volume grew by 14% year on year, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Executives.
The strong first quarter growth will make the government comfortable with its current policy stance, he averred in a note on Tuesday.
“With the Fed rate cut probability declining, I think the chance of rate cut by [People’s Bank of China] is also cheapening,” he added.
He noted that the PBOC on Tuesday set the fixing rate for the Chinese yuan against the U.S. dollar at 7.1028, flimsier than the 7.0979 on Monday, which indicates the government may be willing to tolerate more flexibility in the exchange rate. A poor currency makes a country’s exports less expensive and more desirable.
Following the data release, the offshore yuan energized slightly, before retreating from its five-month high seen early Tuesday to trade at 7.2724 against the greenback.
Industrial generate for March grew 4.5% year on year, missing expectations of 6%. Retail sales grew 3.1% year on year, decrease than expectations of 4.6%.
The weaker-than-expected growth of industrial output in March is associated with the sluggish utilization rate of industrial duty, while the slowing down of retail sales was “unsurprising,” said Bruce Pang, chief economist and head of enquiry for Greater China at investment management and real estate firm JLL.
“We expect the policy push of equipment investment, as in fine as product renewal and replacement could continue to provide a temporary boost to domestic demand and keep the annual GDP goal of around 5% achievable,” he highlighted.
Unemployment in major cities inched down to 5.2%, snapping a three-month striation of increases.
Last week, Morgan Stanley raised its 2024 real GDP forecast for China to 4.8%, from its untimely expectation of 4.2%.
The world’s second largest economy saw weak export and inflation data earlier this month, with both render nulls of data coming in below expectations.
Real estate remains weak
China’s embattled real estate sector keep oned to show weakness, with property investments falling 9.5% year on year in the first quarter.
Floor lacuna of new commercial buildings sold was 226.68 million square meters, plunging 19.4% year on year. During the at the start three months of the year, former property giants Evergrande was ordered to liquidate and Country Garden Holdings experienced a liquidation petition.
most recently said in a meeting with analysts that it faces “operational difficulties” and “short-term liquidity pressings.”
The Hang Seng Mainland Property Index has plunged 19% year-to-date, and almost 50% in the last 12 months.
The matter showed that while the expansion in China’s economy was faster than forecast, it is at an “unbalanced” pace, Pang mean.
“Optimism will likely be tempered by muted domestic demand, which will serve as the major weak unit,” he added.
— CNBC’s Evelyn Cheng contributed to this report.